Fed Expected To Raise Rates Despite Pressure From President Trump and Wall Street

Federal Reserve

The U.S. Federal Reserve is expected to announce its fourth benchmark rate hike of the year on Wednesday, despite pressure from President Donald Trump and some investors. On Tuesday the President sent out a tweet telling central bank officials to “feel the market” and not to just go by “meaningless numbers” when making their decision.

“I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!” Trump tweeted.

Wall Street has also raised concerns that an aggressive rate hike would derail the economy. Investors fear higher rates because they restrict the flow of credit to individuals and companies, and also make borrowing expensive. That in turn tends to cause major shifts that can take a toll on markets.

Some analysts predict the central bank will signal that it is considering whether to suspend or slow its rate hikes, which began three years ago, in 2019 to avoid exerting a lot of pressure on the economy. Others think that the rate increases will come to an end altogether in the coming year.

The latest data by CME Group puts the likelihood of a rate hike by the Fed at 66.3 percent. On Tuesday, the odds for a rate increase were at 71.5 percent and last week they were at 77.5 percent.

In September, The Jerome Powell-led Federal Reserve predicted that it would hike rates three times next year. All eyes will be on Mr. Powell and his team at as they release their projections for future rate increases and their policy statement at 2 p.m. ET.